Former Merrill Lynch Analyst Is Disciplined

Securities industry regulator NASD said Tuesday that it had fined former Merrill Lynch & Co. analyst Phua Young $225,000 and suspended him from the industry for one year for touting stocks he doubted in private.

Young, whom Merrill fired in April 2002, issued positive reports on Tyco International Ltd. and Honeywell International Inc. despite privately harboring negative views on the two companies, NASD said.

The agency, formerly the National Assn. of Securities Dealers, last May charged Young with issuing misleading reports on Tyco and accused him of improper conduct, including flying on Tyco corporate jets.

Young, who once described himself in an e-mail as a “loyal Tyco employee,” published research reports in early 2002 in response to Tyco’s decision to retire $11 billion in debt and spin off CIT Group, a large commercial lender that Tyco had purchased for $10 billion.

Young contended that Tyco would receive $8 billion for its CIT unit and assigned Tyco’s stock a target price of $65 when it was trading in the $30 range, NASD said.

“None of these reports disclosed Young’s privately held views that the CIT unit was not worth ‘anything near $8 [billion],’ that Tyco’s fundamentals were weak because of its debt, and that Tyco’s stock was overvalued,” NASD said.

On Honeywell, Young issued research recommending that investors buy the stock despite negative views on the company that he expressed privately, NASD said. For example, NASD said, the analyst characterized Honeywell as a “totally unmitigated disaster” in e-mail correspondence.

Edward Little, a lawyer for Young, said in a statement, “We wanted a speedy resolution of this case so that Phua Young could return to work as soon as possible.”

He declined to say where Young might end up working.